Yahoo Picks Ex-Warner Exec as CEO / Former head dumped as portal seeks new path

Verne Kopytoff, Chronicle Staff Writer

Published 4:00 am, Tuesday, April 17, 2001

Internet giant Yahoo Inc. selected Terry Semel, a veteran Hollywood boss, today to be its new chief executive, as the struggling Web portal tries to transform itself into an international media heavyweight.

The choice of Semel, best known for his 20-year tenure as co-chief executive of the entertainment company Warner Bros., represents a significant turning point in Yahoo's history.

Until now, the Santa Clara company has relied mostly on managers with technical backgrounds who have worked for Yahoo for nearly all of the Web site's brief, but mostly gilded, life.

"I'm a builder," Semel, 58, said in a conference call this morning. "And I'm motivated by the opportunity to create something great."

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Semel replaces Tim Koogle, who announced his resignation last month. Koogle had been Yahoo's leader since before it went public in 1996, but he had increasingly become the focus of criticism, as the company's soaring fortunes began to decline.

A slowdown in Yahoo's primary source of revenue, online advertising, has hit hard and fast. The company reported its first net loss in nearly two years in the first quarter this year and showed a significant drop in revenue.

Yahoo's shares are down about 94 percent from their all-time high in January 2000. Its stock fell 31 cents to $17.31 in late trading today.

Semel will also become Yahoo's chairman, replacing Koogle, who had been expected to retain that post. Koogle will serve as vice chairman until August, when his role will be reduced to board member.

Semel will begin his job May 1 with a big to-do list. Yahoo, which has 190 million users worldwide, is trying to diversify by offering subscription services to consumers, who have grown used to getting everything for free.

This month, Yahoo began offering real-time stock quotes for a fee. It also disclosed plans to open an online music store, where users can pay to download songs.

Semel did not disclose any plans for Yahoo this morning. He spoke generally about building on the company's solid foundation, while acknowledging that there are enormous challenges.

Koogle said Semel was the company's first choice for chief executive and that no one else had been offered the job. Semel said he has known Yahoo's top executives for more than a year.

Yahoo's management team stressed that Semel's experience with Warner Bros. is particularly relevant to Yahoo's needs. He took control of Warner Bros. in 1980, they said, as its core movie business floundered, and transformed it into an octopus-like organization that embraced international film, television,

and music.

Semel resigned from Warner Bros., along with its other co-chief executive, Bob Daly, in 1999, as the company's music division stumbled. They were also criticized for their own big salaries and for big spending.

Semel has some experience in the Internet through the creation of Warner Bros.' online entertainment site, Entertaindom, which has closed. He also invested in the online company Windsor Media.

Christopher Dixon, a media analyst with UBS Warburg, an investment bank in New York, called Semel a terrific executive, with experience in developing a business and a reputation for making sure projects are well thought out.

George Nichols, an analyst with Morningstar, an online investment adviser, said Semel's appointment as chief executive may help Yahoo make alliances with such traditional media companies as Disney and Viacom. Yahoo is rumored to have attracted several media suitors but said today that it is not interested in being acquired.

"It helps to have someone with media experience," Nichols said. "It always helps to have an industry insider in management ranks, and that's something Yahoo has lacked at the top."